Intel moves higher on cloud, data center gains

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LAS VEGAS, NV – JANUARY 06: Intel Corp. CEO Brian Krzanich shows how many steps he took during a keynote address as tracked by a wearable processor called Curie, a prototype open source computer the size of a button that he unveiled at the 2015 International CES at The Venetian Las Vegas on January 6, 2015 in Las Vegas, Nevada. On Thursday, Intel reported better-than-expected third-quarter results, led by gains in sales of chips for data centers, cloud environments, and memory solutions.

SANTA CLARA — The move to the cloud, and the data center, is proving to be a smart one for Intel.

On Thursday, the world’s largest chipmaker reported better-than-expected third-quarter earnings and sales, led by big gains in products for data centers and cloud computing technologies.

For the three months ending Sept. 30, Intel said it earned $1.01 a share, excluding one-time items, on $16.15 billion in revenue, compared with a profit of 80 cents a share, on sales of $15.8 billion a year ago.

Intel’s results also topped the estimates of Wall Street analysts, who forecast Intel to earn 80 cents a share on $15.73 billion in revenue.

“Our strategy is to be the driving force of the data revolution, said Intel Chief Executive Brian Krzanich, on a conference call to discuss Intel’s results. “Our transformation is accelerating. We’re excited about both our products and progress. There’s lots of room to grow our market share.”

Client computing, or chips for personal computers, remained Intel’s biggest business area, with revenue of $8.9 billion. However, that total was flat with the same period a year ago.

“These were very strong results for Intel,” said Mark Hung, an analyst with technology research firm Gartner. “In addition, the majority of its data center revenue is now coming from cloud and communication service providers, rather than the traditional enterprise clients.”

Rob Enderle, director of tech consultancy the Enderle Group, said the performance of some of Intel’s businesses suggests the company has made the right bets at a time of change among its larger enterprise customers.

“IoT and non-volatile memory solutions groups showed almost unbelievable growth in the high double digits, and this shouldn’t be a fluke,” Enderle said. “This likely reflects a continued massive migration away from rotating media like magnetic drives, and aggressive deployment by its partners of Intel’s IoT solutions.”

With the outlook for its higher-growth businesses improving, Intel said it expects to report a full-year profit of $3.25 a share, excluding one-time items, on $62 billion in revenue.

Following the earnings results, Intel’s investors lifted the company’s shares by about 2.4 percent, to $42.35, in after-hours trading as of 3:20 p.m. PDT.

Rex Crum is the senior web editor for the business section for The Mercury News and Bay Area News Group. He also writes about business and technology for the publications' print and web editions, and has covered business and technology for nearly two decades. A native of Seattle, he remains a diehard Seahawks and Mariners fan and is imparting his fandom to his Oakland-native wife and two young daughters.